Cut to NC tax credits for film industry has production staffs scrambling

There’s no question that if “Homeland” were still in North Carolina, Tiffany Verch would still be in North Carolina.

She grew up in Charlotte and Matthews, graduated from UNC Chapel Hill with a degree in dramatic arts in 2006, found consistent work as a costumer for films and TV series in Charlotte and Wilmington, got hired by the Emmy Award-winning Showtime TV series in 2011 and then bought a house in Charlotte in 2013.

But this past April, “Homeland” announced it would move production to South Africa after spending its first three seasons here in North Carolina, where Claire Danes has become as popular as Cam Newton.

So in May, Verch exited stage left, taking work in Georgia on AMC’s “The Walking Dead” that will keep her employed through November.

“I ended up taking that (job) … because everything was up in the air with the film incentives in North Carolina,” said Verch, 30, by phone last week during a break in shooting near Atlanta. “I wanted to stay there. My family’s there; my friends are there. That’s where I want to be. But I have to go where the paycheck is.”

Many of her peers in North Carolina’s film and video production industry are biting their nails and contemplating similar moves as the end of the state’s current film incentive program – responsible for luring TV series like “Homeland” and movies like “The Hunger Games” – looms on the near horizon.

Through Dec. 31, film production companies can get a 25 percent credit up to $20 million on qualifying expenses; it is one of the most attractive incentive programs in the country. Georgia, meanwhile, provides up to a 30 percent credit, with no cap.

The budget approved this month by the House and Senate has no credits, instead offering grants totaling $10 million. (The Department of Commerce is in the process of determining how the grants program will be structured.) As a point of comparison, under the current incentives program, the state gave out $61.2 million in credits in 2013.

The shift signals the end of a long and public battle by opponents of the current incentives, tracing back to a House bill in spring 2013 calling for the elimination of the refundable portion of the state’s film tax credit.

In some ways, says Charlotte-based film producer Rick Eldridge, the persistent uncertainty was almost as harmful to the industry here as the actual change.

“… I’m not going to plan tomorrow for a movie that I’m going to be shooting next year without knowing what my incentives are going to be. How can I build a budget based on that?” said Eldridge, whose $3.4 million “The Ultimate Life” – shot in Charlotte – aired on The Hallmark Channel this month.

Added Eldridge: “People are not going to deal with grants. They’re not going to apply for a grant and hope they get their money. And the cap of $10 million? One ‘Hunger Games’ takes that, and then it’s gone.”

This summer, the features “Max” (starring Academy Award nominee Thomas Haden Church) and “Ashby” (with Mickey Rourke) were at least partially shot in Charlotte, as was the Cinemax TV series “Banshee,” going into its third season.

HBO, which operates Cinemax, had no comment on whether “Banshee” would return in 2015.

Although “Homeland” clearly bolted for creative reasons, producer Alex Gansa told the Observer in 2013: “I don’t think we would have been here if there hadn’t been tax breaks, and I believe if the tax breaks end, we’ll have to pick up and find another place to shoot.”

Critics of the existing program argue that the state pays out tens of millions of dollars to film companies each year and isn’t getting an adequate return on its investment.

“Many businesses would like a handout from the government,” Rep. Paul Stam, R-Wake, wrote in an email to the Observer last week. “The film industry (the masters of illusion) think there is something different about themselves that make for a special case. In a way there is – here today, gone tomorrow – when the film wraps up. That makes the film industry the least likely candidate for special tax treatment. The real surprise is that states have not seen through this sooner.”

As of late July, the state film office reported, North Carolina has seen $268 million in estimated direct spending by the industry and nearly 19,000 jobs. Commerce Secretary Sharon Decker, whose department oversees the film office, suggested that it’s too early to say whether these numbers will decline.

“There’s a lot of conversation about productions leaving or looking at other locations, but we haven’t seen the impact yet,” she said. “I think there is hopefulness that for a lot of reasons, we’ll continue to attract a lot of this business to North Carolina. We’re just going to have to watch it very, very closely.”

However, local freelance and contract workers in the industry aren’t as optimistic.

“I just feel like the rug has been pulled out from under me,” said Karl Golden, 50, who was a location scout for “Homeland” and now is a van driver for “Banshee.” He predicts the makers of the Cinemax show will pick up and move after they wrap this season, and that he’ll “probably file for unemployment if I don’t get the work that I need.”

Ken Taffaro operates Salisbury-based MedicalProps.com, which has rented medical equipment to “Homeland” and other productions. He recently placed an advertisement in a trade magazine in Georgia in anticipation of business drying up locally. “We’ll miss a lot of business if they take that incentive away,” he said. “No question about it.”

And Chris Cates, whose C3 Studios most recently provided production support for “Ashby,” said he has already begun exploring shutting down or relocating his business.

“Atlanta’s not far away,” said Cates, 61, of Tega Cay. “With their 30 percent incentive, they’re just cranking. … It is a fact that some of the business that’s come to North Carolina is overflow because they have capacity issues there.

“North Carolina has a lot of really positive attributes,” he said. “It’s a location-rich state. It’s a relatively easy state to get in and out of.”

The state built up a good crew base after the incentives kicked in, he said.

“There are a lot of people who have moved into the area because of the work that’s available,” Cates said, “and those people are now fixing up their houses, getting ready to sell them, because they’re anticipating having to move.”

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